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EasyJet trading update provides good news for investors

27th March 2015 Print

As EasyJet announced its second quarter trading update, Ian Forrest, investment research analyst at The Share Centre, explains what it mean for investors.

“This morning, leading low-cost airline EasyJet celebrated good news with its second quarter trading update. Thanks to the continuing fall in the oil price and changes in foreign exchange rates, the group raised its revenue and earnings guidance.

“Investors should note that revenue per seat for the first half of the year is now expected to rise 2.5%, whilst capacity is due to increase by 3.7%. Factors such as these, as well as November 2014’s positive full year results, will make EasyJet an interesting choice for potential investors.

“EasyJet’s shares are trading on a 2016 PE ratio of 12.5, which is lower than average for the sector and makes the shares more attractive for investors. Today’s fall in the price presents an even better opportunity for investors to get on board. The group’s effective management team has supported good performance over the past year, and Carolyn McCall, EasyJet’s chief executive commented that the airline ‘continues to be well positioned to deliver sustainable returns to shareholders due to its compelling network, low cost base and strong balance sheet.’

“Although the airline sector is a very competitive one, we continue to recommend EasyJet as a ‘buy’ for medium risk investors. This is due to its strong trading position, the falling oil price, rising dividend and good economic growth prospects in the UK.”